Creating the Uber of Publishing (Updated)

How Tablo, Draft2Digital and Bookfunnel Can Team up to Fix What’s Broken in Their Industry

An Uber of publishing is right around the corner, and, when it arrives, the massacre will make the current struggles of the industry look like a child’s game. Full vertical integration of publishing is inevitable, and when the consumer-facing app that effectively marries the Wattpad and Kindle Direct Publishing models achieves scale, many traditional publishing companies will be caught out, and some will fail. The lesson of Uber is that if you are in the business of being a middle man (which all publishing houses are), you are incredibly vulnerable unless you find a way to connect consumers to what they want on the home screens of their mobile phones.

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There is a massive oversupply of books, and marketing them to increasingly distracted consumers is an incredibly steep hill to climb. This is why an app on a mobile phone’s homescreen that creates a Wattpad-Kindle hybrid would be so powerful. Contemporary marketing tools would be built into the platform through its social networking capabilities. All the users would be there to read, talk about and share books. Writers would compete only with other writers, not everyone who can post a cat video.

Authors are rapidly waking up to how overpriced the services of traditional publishing houses have become. Back in the day when you had to fund a full print run and might end up with a warehouse full of books no one wanted, it was reasonable for publishing houses to take control of the rights to a book. They were, after all, taking all the risk. The rise of ebooks, digital printing and crowdfunding has made well-managed publishing essentially risk-free. You might not make any money (most don’t), but you won’t lose your shirt either. In spite of these trends, publishing houses still expect to own the rights and are demanding even more. Some want the film, foreign and merchandising rights up front and into perpetuity in exchange for an advance, which often isn’t much to write home about. The “hold on to your publishing rights” advice musicians have been getting for years has always applied to writers. A shift in consciousness will finally take place over the coming years as author services companies take on the roles traditional publishing used to monopolise.

Wattpad’s Lagging Creates an Opening

Wattpad — the only major social networking app that is geared towards readers and writers — is in a good position to pursue vertical integration. The app has 45 million unique monthly users and continues to grow at a steady clip. It is the only real player in its space. The company is in the process of rolling out a host of monetisation options for its stable of star writers and seems to have lost the plot a bit. Sticking video ads no one wants to see in the middle of books isn’t innovative; it’s importing the dying TV advertising model into a non-native platform where it’s even more likely to fail. The best way to monetise books is still to sell them. Finding a way to guide writers who are already connected to a sizeable audience through the self-publishing process and taking a cut seems like something they would pursue aggressively. Especially when much of the work of publishing is so highly commoditised and there’s virtually no cost of entry any more. Wattpad already has a community of highly skilled graphic designers producing close to professional quality covers for free. Bringing them into the fold, hiring in some editors and proofreaders and charging for those services seems like a logical next step. Creating a marketplace for these services in the app and taking a cut of the fees is another viable option.

The main problem Wattpad has is that it still skews quite young, and teenage readers are severely limited by budget. The site is aging up slowly, but having become the depository for all the world’s One Direction fan fiction is not going to help it in that struggle. Being more attractive to self-publishers (most of whom are adults with adult readers) would likely speed up that process. Wattpad currently allows its users connect their profiles to their author pages on the self-publishing platforms Lulu and Smashwords, but that’s not nearly enough. Not by half.

Tablo is Poised to Move into the White Space Wattpad Has Left Open

Tablo is similar to Wattpad in that it’s an app with a writing and reading interface that allows authors to post books for free. The interesting addition is a publishing and distribution layer on top of that. Writers with a more entrepreneurial spirit have an option to “Sell on Bookstores” and accept payment via PayPal. It’s such a no-brainer. Tablo also offers editing packages of varying prices. I haven’t used Tablo’s self-publishing services, but if they’ve found a way to reliably format the books on their site into attractive ebooks, they have a winning formula. Author services is a burgeoning and incredibly lucrative consequence of the self-publishing movement, but no one has really managed to scale the model. If Tablo can attract enough users, it might be best placed to achieve this.

Tablo’s freshness is an additional plus. More “serious” writers who are (foolishly) staying away from Wattpad might feel more comfortable on Tablo. The site doesn’t really have an identity yet. If experimental and literary fiction communities struggling to get attention head over there in droves and become early adopters, they can shape the future of the site. It could become the Wattpad for more mature readers who have the disposable income to buy plenty of books.

Tablo’s major weaknesses are its small user base and it having only one distribution partner: Apple. More partnerships are in the works, but their revenue and opportunities for growth are taking an enormous hit. The quickest path for the company to expand both its user base and revenue is to partner with an established multi-channel distributor that needs a reader-facing app. Wattad will eventually figure out that vertically integrated publishing is a model the company should explore, and they have the clout and relationships to get it up and running relatively quickly. Speed is of paramount importance to whoever wants to claim the market first.

Distribution through Draft2Digital

Draft2Digital is a relatively new player in the ebook distribution playing field, but is has raced to the front of the pack by aggressively pursuing new retail partnerships and providing truly outstanding customer service. (I self-publish to non-Amazon channels through Draft2Digital, and I can personally attest to the quality of the customer service.) The company has begun a reader-facing service somewhat awkwardly named Books2Read designed to help readers find books written by indie authors. It’s an excellent addition to their services that would work better as an app. Draft2Digital has a huge number of writers who likely feel Wattpad isn’t a good fit for them but who could benefit from a similar platform. A partnership with Tablo would provide this platform, help solve Tablo’s user problem and provide Tablo with the distribution partners it needs.

The most important innovation of Books2Read is the site’s universal book links — a single link that will take you to a list of all the online retailers where an ebook is sold, and, more importantly, redirect you to the appropriate geographic storefront. It is truly one-stop shopping, and integrated into an app it would be incredibly powerful.

Leaving the app aside, Draft2Digital needs help for its reader-facing initiative. The UI/UX of the book pages on Books2Read is baffling. The titles are gigantic, the book covers are tiny and there are no descriptions. What works on retail sites has been fully tested over the past 20 years. There was no need to re-invent the wheel. Tablo’s website, by contrast, is pretty well-designed and full of humorous Easter eggs. Information about how to self-publish is almost impossible to find, though. Those editing packages I mentioned? Try to navigate to them on the website without following the link I provided. There is a whimsy and creativity at work on Tablo that I think Draft2Digital could use, and Tablo desperately needs something like Draft2Digital’s matter-of-fact approach to serving writers. Having Draft2Digital manage the back-end stuff and Tablo focus on the user interface could create huge upside for both companies.

Many Indie Writers Want to Sell Direct

Continuing with the theme of cutting out middle men who don’t add value, many indie writers want the freedom to control their prices, sell their ebooks direct to readers and take a larger cut of the profits. Draft2Digital doesn’t have its own storefront; neither does Tablo. The problem with indie author sites that sell ebooks direct is that customers have their preferred e-readers, and most of them have no idea how to get the book they downloaded from the store into the libraries on their devices.

Bookfunnel is a service created by indie authors to help their peers get free copies of ebooks to reviewers, beta readers and fans. Most importantly, it helps the recipients get the books onto their ereaders. This is especially important for MOBI files, the Kindle format. Other ereaders use ePub files, and, if you’re using a mobile phone or a tablet, the ereader app usually automatically imports all ePub files, and your books will show up in your library. Not so for Kindle. Amazon sells more books (ebook or otherwise) than anyone else by some margin. Many people (myself included) use a Kindle or Kindle app to read their ebooks. Not selling direct in this format would be an enormous mistake. But irritating your customers with fiddly tech instructions is an even bigger one. Before Bookfunnel, many indie authors complained that providing customer service to readers trying to sideload their books was becoming a part-time job. Bookfunnel has figured out this problem and is now offering the option to sell direct.

Having a storefront in app form that solves the Kindle sideloading problem is a big win. But the limited use of Bookfunnel thus far means that most readers haven’t heard of it. Draft2Digital’s large base of self-publishers would give them a massive jump in users.

The Missing Pieces

Social Networking

Word of mouth through social networks can really help indie books take off. Tablo’s social networking capabilities are severely limited at the moment. Authors can message their followers en masse, but there is no way for users to talk directly to each other outside of the forums. Tablo is still getting its sea legs, and this problem will eventually be sorted out, but it’s a massive limitation. On the other hand, Wattpad polices spam ruthlessly, so Tablo was smart to leave the functionality off until it has scaled enough to be able to do the same.

Name Authors

Successful monetisation requires older consumers with ready disposable income, most of whom don’t frequent free reading sites like Tablo. Draft2Digital has best-selling authors in its stable, and putting them front and centre of the app launch, incentivising them to serialise new books exclusively on the new site would be the shortest route to getting paying customers to buy into the app.

More Diverse Monetisation Plans

Traditional self-publishing is the basis of both Tablo and Draft2Digital’s monetisation plans, but there is a wider array of options they could explore. Interrupting readers with ads is a terrible idea. Mobile platforms are already moving to block this disruptive content, and it will stand out as even more spammy and irritating as users adjust (quickly and with relief) to a world without it. Here are a few models to consider:

The Subscription Model.Many writers on free sites post only first drafts or samples of their work and direct their readers off-site to e-retailers where they can purchase the complete, polished final books. An integrated subscription site would keep readers in the app. Here, Tablo has a huge advantage over Wattpad, whose readers have been trained over a decade to expect only free books. Some users will resent being asked to pay, but I suspect those who can’t afford the subscription will just avoid those books the way they skirt past authors’ buy links now. Subscription is much less intrusive than terrible video ads that interrupt readers and steal their time in an attempt to keep the site “free”. Wattpad is pursuing this model aggressively with its new chat story app, Tap. [UPDATE 08-Dec-2017: Medium’s subscription service seems to be doing well, and although the site leans heavily towards non-fiction, there may be an opening for fiction writers to get in on the action. Medium is much better positioned than Wattpad or Tablo to help self-publishers earn because it attracts an older audience with more disposable income. The site’s Collections feature is probably the best way for novelists to present their work, and hopefully they’ll open it up.]

Monetised Serialisation. Apps like Radish are monetising serialised fiction by charging small in-app payments to view the next chapter of a story. For writers who have found a dedicated following but are having trouble transitioning into self-publishing (they can’t afford editing and proofreading, etc.), this might be a good middle ground. Hardcore fans might be willing to pay to see content a few days earlier than other readers. If the content is eventually made available for non-paying readers, that might quell the uprising from readers who want to keep the site free. Some popular Wattpadders are already on Radish, and it will be interesting to see if paid serialisation (the model that gave Charles Dickens his audience) makes a comeback.

The Patron Model. Patreon allows artists to provide exclusive content to fans who contribute monthly at different levels to support the artist’s work. Some authors are making a nice living (enough to pay the bills), and, as these free platforms age up and readers with more disposable income join, it might be worth considering adding similar functionality to allow fans to support their favourite writers. [UPDATE 08-Dec-2017: Patreon changed it’s fee structure, and outraged patrons are leaving in droves. It will be interesting to see if the site adjusts quickly or if a competitor can take the opportunity to siphon off some of their market share.][UPDATE 13-Dec-2017: Patreon backed down and won’t be implementing the fee change, but they’ve definitely eroded their customer loyalty. It will be interesting to see if another platform can emerge as a serious rival.]

The Sponsorship Model. Wattpad is already pursuing this model successfully, and has partnerships with brands and film and TV studios that sponsor content related to their products, films and TV shows. Wattpad authors with large audiences have been paid to write alternate endings to TV episodes, short stories based on films, etc. There as many ways to develop sponsored content as there are to tell stories in the written word.

Marketing

Most self-published writers desperately need marketing advice. Integrating free marketing training and a paid marketing arm could add incredible value. Successful self-publishers could be brought in as consultants to help new writers develop marketing strategies.

Hardcovers and Paperbacks

This is the one area where traditional publishing still has a significant advantage. While much of the work that goes into producing physical books is commoditised, the long-standing relationships major publishing houses have with distributors and brick-and-mortar booksellers provide the most benefit to writers to whom they give their full-throated support. The problem is that isn’t most writers.

Draft2Digital allows its users to create print-ready PDF files that are compatible with most print-on-demand services. It’s a great feature that makes it relatively simple to create a well-formatted paperback. The company phased out its relationship with Amazon’s print-on-demand service, CreateSpace, but if it partners with a similar service and incorporates paperbacks into a digital storefront, it could position itself extremely well.

The more difficult task is getting indie books into brick-and-mortar stores. Barnes & Noble has begun selling self-published books from its more successful NOOK Press authors in its stores. This is a strong move that will likely move more self-publishers to publish directly through NOOK Press. It will also make it harder for non-NOOK Press authors to get in. However, money talks. If they think the book will sell, they’ll stock it.

Wattpad partnering with NOOK Press might be the quickest path to a fully vertically integrated publishing venture, but Barnes & Noble has been all thumbs with its NOOK venture, and Wattpad might do well to steer clear. Not to mention, Amazon intends to open more physical stores and will likely use its monopsony power to make itself difficult. In addition, as Amazon’s brick-and-mortar presence expands, successful CreateSpace titles will find room on its shelves. With such a direct path into bookstores, traditional publishing will become less attractive to stable, steadily earning writers who are unlikely to achieve superstar status. There’s a giant pile of money up for grabs, and an enterprising group of disillusioned publishing professionals will take advantage of the opportunity to help these writers succeed without demanding to own the rights to their work. Reputable author services companies are going to proliferate. One break-out hit from this group means the entire publishing model gets turned on its head. Smaller, successful publishing houses that can’t support megastars would do well to get in on the ground floor and start allowing writers to hold on to their rights and be satisfied with a cut of the royalties.

Tablo recently launched a new feature called Communities that links Tablo’s online space to real-life reading and writing spaces. It’s too early to determine what impact Communities will have, but bringing in bookstores, libraries and other important cultural spaces could provide valuable promotional opportunities for self-published writers. Communities shows that Tablo gets it and is positioning itself for long-term success. Other players in the space aren’t really figuring out ways to bridge this gap in the apps themselves (they have events and conferences, etc., but none of it is integrated into the app). While we’re on this topic, I think in the not-so-distant future Amazon is really going to regret not having integrated social networking capabilities into the Kindle apps. (And no, Goodreads’ unusable app doesn’t make up the difference.) The quickest way to get up to speed would be for Amazon to try to acquire Wattpad (they must have already made an overture, right?), but I don’t know if that’s something Wattpad’s founders are open to. They don’t seem to be looking for a quick, lucrative exit.

We’ve just introduced paperback publishing and expanded our distribution network to nearly every online & physical bookshop in the world. We publish to 40,000 retailers in total, including Amazon, the iBooks Store, Barnes & Noble and thousands of bricks and mortar stores, making it the largest network available to independent authors. Being able to write something online, click a publish button and buy it in paperback over the counter of almost any local bookshop is a pretty remarkable experience that I’m still getting used to myself.

You can read the rest of Ash’s reply below.]

In Conclusion

Whether or not the three-way deal I’ve outlined comes to fruition, an Uber of publishing will be created. As writers find new ways to bring their stories directly to readers, the commoditised work of publishing will continue to transition over to a fee-based model, and a recalibration of the revenue sharing between publishers and authors is inevitable. Publishers have bet the farm on big names or titles, and if you can make it into this rarefied group whose books get reviewed by the broadsheets, nominated for prizes, translated into 20 languages and prime placement in brick-and-mortar bookstores, then an old school (if inequitable) partnership with a major publishing house is probably still a good bet, because you’ll need the logistical support. For nearly everyone else, the cost-benefit analysis probably won’t pan out in their favour.

While major publishing houses are still the only institutions with the infrastructure to handle international bestsellers, paying out huge advances for new titles they hope will be big sellers is the source of virtually all the risk in their business model. They’re not taking advantage of the lower risk and attendant stability offered by the emerging landscape. Shoving out mid-listers who could earn steadily (if not spectacularly) with some support, guidance and modestly-budgeted social media-focussed ad campaigns to gamble on finding the next J.K. Rowling is going to cause a major publishing house to implode.

Agents are also incredibly vulnerable in this brave new world. Sites like Wattpad allow for product testing at scale. As these sites age up and more book buyers start using them, the data about who is reading and liking what books will take the guesswork out of picking winners and targeting consumers. In a few years, there won’t be any slush piles for agents to lament over because new writers are being trained by Wattpad et al. to take their work directly to readers first. If enough book-buying readers like their work, they’ll sell books, and the publishing houses will go directly to the source. (A B2B platform where publishers and agencies can access their reader data could become an enormous revenue stream once sites like Wattpad and Tablo age up enough.) As agents’ relationships with publishers lose value and new monetisation plans surface, agencies that don’t quickly get up to speed with the new market forces and how best to advocate for their clients are going to fall out of favour. I can see a batch of young, hungry IP lawyers who have no interest in being tastemakers moving into this space and creating plenty of upheaval by charging hourly fees instead of asking for a cut of the earnings. Anyone who makes their living taking a percentage of authors’ earnings is in an incredibly precarious position. If that seems impossible, talk to the poor bastards who were living high off the hog on their black car services pre-Uber. Ask them about the absolute carnage of the past 36 months.

The rapidly changing publishing landscape has revealed the dearth of creative thinking and unwillingness to adapt in the industry. Instead of strengthening their relationships with writers and creating a situation where everyone can win, the trend seems to be adopting even more draconian publishing contracts and fleecing unsophisticated writers. To the CEOs of publishing houses: The people formulating these plans are a cancer, and they are slowly killing your businesses because they are preventing you from innovating. Do you know how you catch a monkey? You offer it a sweet in a jar. It won’t open its fist to let go of the treat and is trapped. In a world where Airbnb is trouncing Marriot Hotels, anyone telling you that fiddling with rights reversion clauses is a strategy for success is a monkey with its fist stuck in a jar. Continuing to listen to them might have you all standing on the kerb with the contents of your desks in cardboard boxes in 48 months. There being no cost to entry and new technology continuing to lighten the logistical load means that someone somewhere is going to figure out how to hold on to their rights and become an international bestseller without a major house backing them. They will create a blueprint for success, and there will be a mass exodus from traditional publishing that author services companies will have positioned themselves to accommodate. You have the resources and manpower to outflank them. If you don’t kill your failing business model, someone else will. (Murder your darlings, right?) The time to have the uncomfortable conversations, cut the dead weight and pivot to a new strategy is now. A storm is coming, and when it crashes over you, there will be a weeping and gnashing of teeth the likes of which you have never seen. The destruction is inevitable. But in the devastation lies a host of opportunities for those willing to be first movers. Fast followers will be rewarded as well. The first publishing houses to realise that they’re in the author services business now will make the smoothest transition. Trying to hold on to the old ways is absolute folly. The world is moving too fast, and it’s not going to slow down. Power has changed hands.

Readers are the new gatekeepers.

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